As the media hype around a potential “Grexit” (a Greek exit from the Eurozone, for those living under a rock) nears its peak, many financial planners will field client questions about how it will affect them.
Regardless of how the situation is resolved, the level of client interest and the detail of their questions highlight the importance of knowing and understanding them and their advice expectations.
“Do I really understand my client? Are my clients people who want to be educated and make the decision [about their investment portfolio], or are they looking to me to make the decisions for them?
“You need to be able to recognise the different client traits, and refine your value proposition accordingly,” says Terry Bell, partner at consultancy Business Health.
In any case, media reports are a poor source of investment intelligence, being a lagging rather than a leading indicator, according to Mike Jeffs, director of Melbourne-based planning practice Portfolio & Wealth Management (PWM).
“Clients might read about events in the mainstream press, and then come to us, but usually if there was something that could be done, it’s too late by then,” he says.
Jeffs’ clients vary between very astute individuals and couples who work in the financial sector or related areas, and those who are completely outside the industry, and reliant on their adviser to keep them informed.
“There are various ways people like to utilise our advice, whether as a sounding board, a benchmark or guide, or they want to outsource everything,” he says. Still others end up not wanting the advice at all and choose to proceed on their own.
While investment management advice is an important part of PWM’s service offering, Jeffs’ emphasises that it doesn’t pick stocks. “We don’t try and time in and out of markets…clients usually see that type of thing covered in the mainstream media, [such as] a buy day or sell day,” says Jeffs, but this is something it often has to re-educate clients about.
“We try to be proactive in sending clients emails or notifications in contacting them about major market events. During the GFC we did that quite well, keeping clients up to date with what’s happening, what they could expect to see, and what might happen with their portfolios as a result.”
Gathering client intelligence
Conducting regular reviews of what clients like about the advice they receive – and what they don’t like – is an important way of helping ensure service delivery meets expectations. However, only three out of 10 surveyed financial planning practices actively seek client feedback, according to a February study conducted by Business Health.
“We definitely do,” says Jeffs. “We have a small client base of around 85 clients in total, which is relatively small, but we’ve got pretty good relationships with them.
“On an annual basis, each March, we send out a survey to every one of our clients, which goes through their experiences in the last year, how they found us, how they rate us in keeping them informed and in explaining issues – around 40 questions, we analyse that, report back to every one, compare it to different years.”
